Analysts are anticipating U.S. consumers to have another year of positive credit activity, marking one of the longest periods of sustained consumer credit health in recent decades.
Serious consumer delinquencies (loans 60 or more days past due) are expected to rebound for auto in 2020, falling 3 basis points year over year to 1.44%, according to TransUnion’s latest consumer credit forecast. “The U.S. consumer is as strong as ever,” said Matt Komos, vice president of research and consulting for TransUnion’s financial services business unit. “More consumers are securing loans and increasing their balances in a measured manner, all while maintaining historically low delinquency levels.”
Auto lenders are expected to stay consistent in the share of prime and nonprime originations next year. TransUnion noted, adding that nonprime will see a 10-basis point uptick year over year to 34%, while originations in the prime and super prime tiers will remain steady at 66%.
Despite the strong credit performance, TransUnion predicts that new car sales may take a hit this year. The expect concerns of affordability to persist due to the looming threat of auto tariffs and higher new-vehicle and gas prices. Meanwhile, the average auto loan balance is anticipated to grow 1.6% by the fourth quarter of 2020 – a decelerated pace from this year’s 1.9% loan balance growth during the same time frame.